Human rights groups had called on the International Olympic Committee to bar Saudi Arabia from competing in London, citing its failure ever to send a woman athlete to a Games and its ban on sports in girls' state schools.
Powerful Muslim clerics in the ultra-conservative state have repeatedly spoken out against the participation of girls and women in sports.
In Saudi Arabia women hold a lower legal status to men, are banned from driving and need a male guardian's permission to work, travel or open a bank account.
Under King Abdullah, however, the government has pushed for them to have better education and work opportunities and allowed them to vote in future municipal elections, the only public polls held in the kingdom.
"The kingdom of Saudi Arabia is looking forward to its complete participation in the London 2012 Olympic Games through the Saudi Arabian Olympic Committee, which will oversee the participation of women athletes who can qualify for the games," said a statement published on the embassy website.
In April the head of the kingdom's General Presidency of Youth Welfare, the body that regulates sports in Saudi Arabia, said it would not prevent women from competing but that they would not have official government endorsement.
The IOC said on Monday that talks with the Saudis were "ongoing" and that "we are working to ensure the participation of Saudi women at the Games in London".
The head of the kingdom's Olympic mission, Khalid al-Dakheel, told Reuters on Sunday evening however he was unaware of any developments allowing women to participate.
Top Saudi clerics, who hold government positions and have always constituted an important support base for the ruling al-Saud royal family, have spoken against female participation in sports.
In 2009 a senior cleric said girls risked losing their virginity by tearing their hymens if they took part in energetic sport.
Perhaps the most likely woman candidate to compete under the Saudi flag in London, equestrian Dalma Malhas, represented the kingdom at the junior Olympics in Singapore in 2010, but without official support or recognition.
Physical education is banned in girls' state schools in the kingdom, but Saudi Arabia's only female deputy minister, Noura al-Fayez, has written to Human Rights Watch saying there is a plan to introduce it. (Editing by Andrew Roche)